Microsoft's smartphone market share dipped between January and April, according to new data from comScore. That can't be good news.
Microsoft's (NYSE:MSFT) share of the smartphone market
continues to dip, according to new numbers from comScore.
The research firm plugged the company's market share at 6.7
percent in April, down from 8 percent in January. That's not nearly as bad as
Research In Motion, which saw its share plunge during the same three-month
period from 30.4 percent to 25.7 percent. Google and Apple continued to enjoy
upticks in their respective shares, with the former's Android operating system
occupying 36.4 percent of the market by April, while Apple's iOS held 26
According to the firm's June 3 research note, some 74.6
million people in the United States owned
smartphones in April, a 13 percent increase
Microsoft is banking on several factors to increase uptake
of its Windows Phone 7 smartphone platform, whose devices consolidate Web
content and applications into a set of subject-specific "Hubs" such as "People"
and "Games." This stands in contrast to the model embraced by Google Android
and iOS, which offer grid-like screens of individual apps. Despite the
innovation of its user interface, Windows Phone 7 lacks a number of features,
something Microsoft hopes to correct with its wide-ranging "Mango" software
update later this year.
Microsoft executives demonstrated some of Mango's more
top-line features during a May 24 press event in New York City: Multitasking, a redesigned Xbox Live Hub, visual
voicemail, the ability to consolidate friends and colleagues into groups within
the "People" Hub, and Local Scout, which offers a view of everything to see and
do in a particular neighborhood. The "People" Hub will also include data from
Twitter and LinkedIn, as well as the ability to share and tag photos.
Mango's newfound enterprise functionality includes the
ability to search a server for email items no longer stored on the device, and
share and save Office documents via Office 365 and Windows SkyDrive. There's also
an upgraded Internet experience, one that tightly bakes Microsoft's Bing search
engine into the interface.
Mango will boost Windows Phone 7's version number to 7.5.
But that's not Microsoft's only play: the company is also betting that its
recent partnership with Nokia will help boost Windows Phone adoption over the
next few years.
Under the terms of that agreement, Nokia will load Windows
Phone onto its hardware, abandoning its homegrown Symbian operating system in
the process. Given Nokia's prominent position in global smartphone sales,
Microsoft stands to benefit tremendously from that switchover-however, some
analysts suggest the two companies are about to hit a major speed-bump:
"We would continue to avoid the stock as Symbian smartphone
sales are falling off faster than expected and we are skeptical that new
Windows Phone (WP) models will be able to replace lost profits," Stephen Patel,
an analyst with Gleacher & Company, wrote in a May 31 research note. "Our
checks suggest mixed carrier support for Nokia's transition to WP."
Android is also threatening Nokia's traditional stronghold
in lower-cost handsets. "We think sub-$200 Android handsets, including those
from new entrants such as ZTE and Huawei," he added, "are hurting Symbian
units, which largely target the same price range."
To top things off, Patel seems concerned about Windows
Phone's ability to replace Symbian's market presence as the latter transitions
to the dustbin of dead technology: "We remain concerned that WP industry sales
remain below 2mil units/quarter and that [Nokia's] scale will not be enough to
offset a faster than expected drop-off in Symbian phone sales."
Other analysts have voiced similar concerns.
"While we maintain our belief the Nokia-Microsoft
partnership is best positioned to potentially create a third viable smartphone
ecosystem" Canaccord Genuity analyst Michael Walkley wrote in a June 1 research
note, "we are increasingly concerned about sales for Nokia's Symbian devices
during the transition period."
In addition to HTC and Nokia, Samsung and LG Electronics
have apparently committed to building new Windows Phone devices preloaded with
Mango. Acer, Fujitsu and ZTE are also planning to produce Windows Phone devices
for the first time. "We have some Windows Mango phones," HTC CEO Peter Chou
reportedly told Reuters
. "We are very committed to Windows phone products."
Another likely dampener of Microsoft's smartphone share is
the zombie presence of Windows Mobile, Windows Phone's antiquated predecessor.
Those older devices could be dragging down Microsoft's overall share as users
abandon them for newer offerings.